The gap between housing prices and income in Vancouver has widened dramatically since the mid-1990s, according to a new analysis.
“The early ’90s housing crisis hit Canadians hard. And while times were tough and homes hard to afford in 1994, thirty years later the situation is worse,” explained a report from RATESDOTCA.
“In 1994, the average home in Vancouver cost approximately eight times the median after-tax household income. In 2024, it costs approximately 14 times the median after-tax household income.”
The report finds the average income rose 34 per cent over the past 30 years, while the average home price increased 142 per cent.
“Median after-tax household income in Vancouver in 1994 was $36,254 ($67,172 in 2024 dollars), while the average house price was $289, 334 ($536, 067 in today’s dollars) … In 2024, the median after-tax household income in Vancouver is $89,771, and the average home price is $1,295,619.”
The report suggests the housing affordability crisis in Canada today invites comparison with that of the early to mid-1990s. but even as Canadian homeowners were “caught in a tightening vice” of much higher interest rates and a sluggish post-recession economy, it argues homes were more affordable in 1994 than they are now.
“The current housing crisis in Canada is due to a confluence of factors, including lack of supply, inflation, and fast-rising interest rates after a period of rock-bottom rates and insatiable demand in 2021 and 2022,” said Victor Tran, a mortgage and real estate expert with RATESDOTCA.
“Even though the Bank of Canada has begun to cut the overnight rate, lowering interest rates alone isn’t likely to make homes more affordable for the majority of Canadians.”
Despite the ever-widening income gap, the BC Real Estate Association says the provincial market is “balanced” heading into the summer.
Its numbers for May show sales in B.C. were down 11 per cent compared to a year ago, but activity is picking up and the number of listings is also on the rise.
“We are starting to see a pick-up in sales activity to more normal levels, which, combined with rising inventory, is helping to keep markets in balanced territory,” said BCREA Chief Economist Brendon Ogmundson.
Home prices for May were up 2.5 per cent compared to last year in Vancouver, at an average of $1,345,157. In the Fraser Valley, the average price for the month fell 1.5 per cent to $1,074,923, according to the BCREA.